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Old 12-05-2007, 04:38 PM
Location: NYC
54 posts, read 294,127 times
Reputation: 23


Hi everyone,

I'm planning on moving to LA in July 2008. I'm currently contributing to my company's 401K plan. I wanted to know how to go about transferring the balance once I leave. I'm not planning on cashing it out since I'd lose practically all of it in taxes. I've been looking online and read somewhere that I can roll it over into a basic IRA account.

What I'd like to know is do I roll it over immediately after I leave the company ? Is there a certain time limit ? Also, do I need to open an IRA account in advance so when I transfer the balance, I already have an established account or can I open one as soon as I am going to transfer the money ?

Sorry if that all sounds confusing, I'm a bit confused over it myself

Thanks in advance
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Old 12-05-2007, 04:46 PM
11,715 posts, read 35,042,490 times
Reputation: 7466
I'm not sure of the time limit but I think there is one. When my wife left her old company, she created an IRA account with Vanguard. You then roll the 401k money over into the IRA. I believe the term you're looking for is "direct rollover". The money can't go through you or it'll incur a 10% penalty and ordinary income tax. Whoever you open your new IRA with can help you through the process. If your existing IRA is compatible with the 401k fund (ie, both are pre-tax dollars), you should be able to use it instead of opening a 2nd account.
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Old 12-05-2007, 08:18 PM
Location: Sherman Oaks, CA
6,203 posts, read 15,028,440 times
Reputation: 7951
It may depend on how big your existing 401(k) is. Some companies have a limit, maybe $5,000, that an account has to reach before they'll let you leave it there. If you have a lot of money in it, though, most companies will let you park it there indefinitely. You can still change how it's invested, but you can't make any more contributions, of course.

If you choose to have your prior employer sell all of your investments and send you a check made payable only to you, you then have 60 days to roll the money over to an IRA account, or you'll be penalized (if you're under 59 1/2 years old) and taxed. If the check is made out to your new company FBO "Your Name", then it's a direct rollover. You should set up the new IRA first, and then once you have an account number, you can put that on the 401(k) rollover paperwork from your old company. Some companies will send the check directly to your new employer; others will mail it to you, and you have to forward it to your new employer's 401(k) department.

Also, yes, if your new company has a 401(k), it should also accept a direct rollover from your prior employer.

Hope all of this helps.
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Old 12-05-2007, 08:21 PM
Location: Salt Lake City, UT
520 posts, read 1,694,841 times
Reputation: 476
I think the time limit depends on the company holding your 401k. At my last company there were no requirements to do a rollover in a certain amount of time. You should be able to get all the info you need from your 401k administrator.

If you want to do a rollover open a rollover IRA with a company like Fidelity or Vanguard and then do a direct rollover. The company you open your rollover IRA with will have different rules for how they fund the account. Some will want you to open the account first. Some may not care. They have specific ways they want checks made out, etc.

What you should do is find out if there is a time limit for you to transfer money after you leave. Then pick a company that you want to move the money to and find out how to open the rollover IRA.

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Old 12-06-2007, 03:32 PM
Location: NYC
54 posts, read 294,127 times
Reputation: 23
Thanks everyone for your replies. I appreciate all the good info !!!

I will definitely check with my 401K provider (Mercer Investments) to see what their rules are on roll overs.
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